Federal government contracts with several drugmakers producing vaccines and treatments for the new coronavirus appear structured to avoid oversight on prices that's available through laws governing acquisitions and intellectual property transfers, an advocacy group claims.
Knowledge Ecology International analyzed contracts worth hundreds of millions of dollars that federal agencies signed with AstraZeneca, Johnson & Johnson, Moderna, Novartis, Regeneron and Roche to assist in the development of vaccines to prevent infections with the SARS-CoV-2 virus, or to treat the resulting disease, COVID-19.
Several waive requirements that any products be available on "reasonable terms," a phrase that could potentially include affordable prices, while also limiting the power of the federal government to "march in" and take possession of the intellectual property and its rights to a royalty-free license.
The federal government has never invoked its so-called march-in rights to seize intellectual property developed from research that it's funded due to concerns over price or availability. However, waiving the authority in contracts could effectively short circuit oversight on pricing, allowing the federal government to ignore petitions to invoke its power over federally funded intellectual property.
Kathryn Ardizzone, an attorney for KEI, said public pressure from march-in petitions yielded "concessions" in two cases: one beginning in 1997 that allowed a bone-marrow device developed by Cellpro to remain on the market despite a court injunction; and the other Abbott Laboratories' lowering of the price of the HIV drug Norvir following a 2004 petition.
"The threat of a march-in petition can lead to better outcomes because it's important leverage," Ardizzone wrote in an email to BioPharma Dive.
KEI's analysis was first reported by Axios and STAT.
An HHS spokesperson said the contracts were written so that the government owns all the doses of vaccines and therapeutics that were manufactured using taxpayer funding.
Among the contracts analyzed by KEI, only Moderna's with the Biomedical Advanced Research and Development Authority, or BARDA, incorporates the full federal authority over government-funded intellectual property outlined in a 40-year old law known as Bayh-Dole, which aimed to speed the transfer of patented inventions like new drugs from research institutions to the private sector. That law includes requirements the inventions be available on a "reasonable terms" and retains federal power to march-in when they aren't.
BARDA contracts with AstraZeneca, J&J, Novartis, Regeneron and Roche do not include the phrase "reasonable terms," KEI says.
The government redacted the section of the contract with Regeneron over march-in rights, while the remainder state that march-in rights can only be invoked if the companies did not attempt to achieve "practical application" of their BARDA-backed projects to address unmet medical needs.
The HHS spokesperson said the Regeneron contract section was redacted because it was business sensitive.
With regard to federal rights to a royalty-free license, another Bayh-Dole provision, the Johnson & Johnson contract waives those rights, while Regeneron and Roche specify that the federal government can't transfer the royalty-free license to another entity for commercial purposes.
Editor's note: This story has been updated to include response from HHS.